Fed’s Bullard: US economy can handle higher rates (Video)

(11 Jul 2022) FOR CLEAN VERSION SEE STORY NUMBER: 4388107 ++EDIT BEGINS, ENDS ON SOUNDBITES++ ASSOCIATED PRESS St. Louis -- 11 July 2022 1. SOUNDBITE (English) James Bullard, St. Louis Federal Reserve president: "It just doesn't seem like the U.S. economy has been in recession for the last two quarters. And certainly anecdotal information that I get from the Eighth District and from around the country just does not suggest anything like a recession. If there if there are limits to production, it's because of supply constraints, not because of any lack of demand." ++WHITE FLASH++ 2.  SOUNDBITE (English) James Bullard, St. Louis Federal Reserve president: "If you look at the 1980s, which was a boom decade for the US economy, it had very high interest rates compared to today. And if you look at the 1990s, also boom period for the US economy, it had higher interest rates than today. So it's it's not that you can't grow and prosper in a higher interest rate environment." ++WHITE FLASH++ 3. SOUNDBITE (English) James Bullard, St. Louis Federal Reserve president: "Now we have lots of inflation but the question is, can we get back to 2% without disrupting the economy? I think we can." ++ENDS ON SOUNDBITE++ STORYLINE: Last week's jobs report points to a solid U.S. economy with little sign of a recession on the horizon and one that can withstand higher interest rates, St. Louis Federal Reserve president James Bullard said Monday.   Financial markets are flashing signs that an economic downturn could arrive sometime next year, as Americans grapple with the highest inflation in four decades and the Federal Reserve pushes borrowing costs higher. But Bullard said in an interview with The Associated Press that the central bank wouldn't have to drive the economy into a recession or significantly raise unemployment to bring inflation down to its 2% target. "Now we have lots of inflation, but the question is, can we get (inflation) back to 2% without disrupting the economy? I think we can," he said. Bullard's optimism coincides with a rapid pace of interest rate increases by the Fed, intended to combat the highest U.S. inflation in 40 years. Higher rates limit the ability of consumers and businesses to borrow and spend, which can cool growth and inflation, but also carry the risk of tipping the economy into a downturn. Prices rose 8.6% in May compared with a year ago, and could move even higher when the government reports inflation figures for June on Wednesday. Bullard also said he currently supports a 0.75 percentage point increase in the Fed's benchmark short-term interest rate at its next meeting later this month. Its rate is currently in a range of 1.5% to 1.75%, after a 0.75 percentage point hike at its June meeting, the largest since 1994. The Fed typically moves rates in quarter-point increments, but Chair Jerome Powell has said the Fed wants to move "expeditiously" to a level of about 2.5%, which would neither stimulate or restrain growth. On Friday, the government's jobs report showed employers added 372,000 jobs, a healthy increase, while the unemployment rate stayed at 3.6% for the fourth month in a row, slightly above the five-decade low reached just before the pandemic.    The robust figures contrast with signs of softening in the economy, from falling home sales to declining factory production to slowing consumer spending. The economy contracted in the January-March quarter and real-time data trackers, such as one maintained by the Atlanta Federal Reserve Bank, suggest it did so again in the April-June quarter. Clients are reminded: Subscribe for more Breaking News: http://smarturl.it/AssociatedPress Website: https://apnews.com Twitter: https://twitter.com/AP Facebook: https://facebook.com/APNews Instagram: https://www.instagram.com/APNews/ You can license this story through AP Archive: http://www.aparchive.com/metadata/youtube/0b8fd142452e4544875dfb2a0e6f7267